THE CRISIS OF THE

E U R O P E A N
ENERGY SYSTEM
Alexander Stahel

The Global Warming Policy Foundation
Note 35

The Crisis of the European Energy System
Alexander Stahel
Note 35, The Global Warming Policy Foundation© Copyright 2022, The Global Warming Policy Foundation

THE CRISIS OF THE

E U R O P E A N
ENERGY SYSTEM
Alexander Staheliii

Contents
About the author	v

The European energy system crisis	1‘Fit for 55‘ laws and decarbonising the grid	4

About the Global Warming Policy Foundation	10

About the author
Alexander Stahel is a Swiss-based investor. He is the founder, chairman and CIO of Burggraben
Holding AG, which specialises in commodities. He can be found on Twitter at @BurggrabenH.

v

The European energy system crisis
The European electricity grid is a modern miracle. It is
the largest synchronous electrical grid (by connectedpower) in the world. It interconnects 520 million end
consumers in 32 countries, including several that are not
European Union members, such as Morocco and Turkey.
In 2019, total net electricity consumption across the continental grid was 2,635 terawatt-hours (TWh). If you add
the countries that are not synchronous but are connected – Great Britain, Ireland, the Nordic and Baltic states– the total rises to more than 3,300 TWh. This is a great
deal of electricity.
The grid is built on physics, not ideology. For example, one physical law says that the generation of alternating current that flows through the grid must match
consumption (‘load’, in the jargon) at all times – that is,for 525,960 minutes per year – because electricity largely cannot be stored. This simple fact is critical for understanding the problem that faces us.
In order to ensure that supply meets demand acrossEurope, electrical load is constantly being forecast, inblocks as short 15 minutes long, and thousands of generators bid to meet that demand. The network frequency is the key measure of the health of the grid. Measured
locally, but of supra-regional significance, it is the first indicator of an imbalance between supply and demand. It
must be kept within very narrow bounds; a failure to doso would lead to damage to infrastructure or even thecomplete shutdown of the system.
Frequency deviations – incidents – happen for manyreasons, but have become more common as the shareof wind and solar on the grid has increased. Renewables
are not dispatchable – their output cannot be increased
minute to minute to meet a shortage of supply – so froma grid perspective they are unreliable. The impact of theirwidespread deployment is clear from the fact that frequency incidents have increased from 33 hours in 2020
to over 52 hours in 2021, an increase of more than 50% injust one year. In 2021 alone, the European Grid had twomajor (’Scale 2‘) incidents, for which final explanatory reports had to be prepared by an expert panel at the grid
operator, Entso-e.
The underlying issue is that the European grid is increasingly unable to supply enough power to meet demand. Figure 1 shows the problem: most countries are
net electricity importers, relying on France and Germany,and to a lesser extent the Czech Republic, to make ends
meet. In other words, most European countries have nottaken responsibility for their own energy security.
160

40

Net exports/(imports) (GWh)FranceGermany

20

Czech Republic
Belgium0Net total
Hungary
(20)

(40)
Italy

(60)
2015

2016

2017201820192020

2021

Figure 1: Net electricity imports and exports for selected countries
The analysis covers 18 selected countries. The key ones are highlighted.

A few countries are particularly problematic.
• Italy is by far the worst offender, having closed its nuclear power stations in the 1990s, building
only a few onshore windfarms and none offshore at all, and therefore now having an almost
complete reliance on natural gas, for which it has failed to secure reliable supply.
• Austria has a mix of hydro and natural gas, but relies on Germany to balance the books. It appears to have escaped the notice of the country’s leaders that Germany has been engaged on
the Energiewende – a shift to renewables and away from nuclear power and fossil fuels – for thelast 20 years.
• Hungary relies on Russian supplies of natural gas to fuel its electricity grid.
• Slovakia and Finland have at least managed to bring some new nuclear power onstream, but it
has been hard and expensive and the process is yet to be completed.
• The Dutch rely on natural gas, and are sitting on the massive Groningen gas field, but havedecided to phase out production there, leaving themselves at the mercy of international LNG
markets.
2Overall, the European continental grid, once a major exporter of power, now relies on imports from Norway, Sweden and theUnited Kingdom to keep things running. At the moment, thissituation is barely manageable, but there are four major shortterm issues, and one gigantic structural long-term problem, thatshould alarm policymakers across the continent. The short-term
issues are as follows.

French nuclear
France, as the European leader in nuclear power, should be able
to deliver 450 TWh per year. However, corrosion issues havecaused its fleet’s output to decline alarmingly; it may be as low as
315 TWh in 2022, or just 59% of capacity, according to guidanceissued by EDF, the nationalised utility responsible for operations.
Even delivering this figure may prove difficult, as EDF has a history of overpromising and underdelivering.
As a result, France has recently become a net importer ofpower for the first time in decades and electricity prices havesoared. Output in EDF’s reactors in the UK and Belgium have also
declined sharply.

German nuclear
EDF’s nuclear power stations are badly maintained, but that is
not true of Germany, where the fleet has long operated at wellover 90% of capacity. Germany is also theoretically secure in its
supply of uranium fuel (although not in practice), and of course
nuclear power is both zero-carbon and extraordinarily safe. Nevertheless, in 2011, when Angela Merkel‘s CDU party was underpressure to form a coalition, she took the decision to phase out
all of Germany’s nuclear plants, eliminating 25% of its electricity
output. With the closure of its last four nuclear plants due in December 2022 (representing output of 32 TWh), Germany is likely
to turn into another net importer of electricity, having long been
one of Europe's largest exporters. This will have serious consequences for all the countries that currently rely on its exports tomeet a large part of their electricity demand, in particularly Italy,
Austria and Luxembourg.
There is an expectation that Germany will replace nuclear
with mothballed coal-fired power stations, but it remains unclear
how many units can be brought back into operation; Reuters hasreported that most are too old to be reactivated. Some power
station operators have reported difficulties in obtaining the necessary coal supplies, which would normally come from Russia,
and others have declared that the current high coal prices would
put an impossible strain on their cash flows. That leaves Germany, and as a result much of Europe, reliant on gas, which is now invery short supply.

Norwegian hydroWith almost every constituent country an importer, and withmost of the rest soon to be so, Europe is looking to hydro power3

from Norway and Sweden to plug the supply gap. However, alack of snowfall last winter has left reservoir levels so low that theNorwegian government has considered limiting exports. If they
do so, then the European grid will be unable to meet demand.

Ukraine
In March, in the wake of the Russian invasion, the European andUkrainian grids were synchronised. This measure provided important support for the Ukrainian system, but introduced furtherrisks for European energy security.

‘Fit for 55‘ laws and decarbonising the grid
The major strategic issue that threatens the grid is that a handful of people in positions of power have committed us to a dramatic reduction of our carbon dioxide emissions. The EuropeanCommission has transformed these commitments into a legal requirement to reduce emissions by 55% from 1990 levels before
2030 – the so-called 'Fit for 55' laws. The scale of change to society that this implies is hard to comprehend.
Can such laws ‘save’ the planet from global warming? I have
my doubts. Global carbon dioxide emissions will be determinedby economic growth – particularly in Asian countries – and by
population increases, particularly in Africa; from 219 million to a
predicted 600 million in Nigeria alone by 2050, for example. Soeven if Germany or even all of Europe were to de-industrialise
overnight – and I mean 100% de-industrialise – global CO2 emissions would not even be dented. China alone will add 33 GW of
new coal-fired plants to the grid by 2023; it needs more electricity as a matter of urgency.
In fact, there is every chance that European emissions willincrease rather than decrease. Nuclear fleets across the continent
are ageing, and if they are not replaced, the grid will lose another
20 GW of supply by 2030. But if it takes 15 years to replace anaging nuclear power station, we are too late already. Worse, by2040, another 70 GW will have been retired. Replacing all this capacity with wind power is impossible; 18 GW of nuclear power
equates on average to 3,146 15-GW offshore turbines. Solar isworse – in northern Europe, it is little more than a waste of precious mineral resources. Delivering a building programme on thescale required, and in the seven years remaining before the deadline, is an engineering and financial impossibility.
Electricity was never only about energy, and always abouttiming and location too. So the problems with renewables go
deeper. Even if all of the short-term problems set out above were
magically fixed, the shift to renewables would still require:• a doubling of the size of the grid infrastructure, a task thatwould take decades (because nobody wants to live near ahigh-voltage transmission line).
4• grid-scale chemical storage for when the wind isn’t blowing.
Frequency stability dictates that renewables must be accompanied by storage, so that power can be dispatched if andwhen operators need it to match peak loads. Recall that failure
to do this minute by minute will cause damage to infrastructure,and possibly blackouts. Germany used to be able to deal withpeak loads on its own account, but it now relies on (rapidly declining) imports of French nuclear power. Where it will go in future remains entirely unclear. Will other European countries, already short of power, build capacity to help Germany? It seems
unlikely.
At current levels of electricity demand, and once Germany
has abandoned its coal plants as required by law, it will need atleast 15 TWh of storage to manage what is known as Dunkelflauten – prolonged periods of little to no wind or solar, typically occurring in the winter months and that we see from time to time.
As its economy becomes further electrified, that storage requirement will increase over-proportionally.
However, at time of writing, it only has a few megawatts. Toemphasise the point, the amount of grid-scale storage would
need to be two orders of magnitude higher. According to theEuropean Commission, the EU would need 550 GW of storage todecarbonise the grid, although its rather generous capacity factors suggest a still higher figure would be needed in reality. These
numbers and the timescale proposed are, respectively, very large
and completely unrealistic.
The list of possible storage technologies is long, but the reality is sobering. There is 53 GW of electricity storage in Europe,
95% of which is pumped storage, mostly in the Alps. Pumped
storage is a tried and tested approach, but would be hard toexpand, because suitable sites are few and far between, and it
would take many years to do so, because people object to flooding mountain valleys. The Nant de Drance pumped hydro station in Switzerland cost CHF2 billion (£1.8 bn) and might deliver
1 TWh of power per year. Europe needs the equivalent of 1200 ofthese units to deliver a renewables grid, so the total cost would
run into trillions. Moreover, pumped storage is what is known asmechanical storage that cannot release energy on the very shorttimescales required for frequency stabilisation. For that, chemical batteries will be required.
There are just over 4 GW of grid-scale batteries worldwide.
The Tesla Gigafactory (once completed) will produce enoughbatteries each year to store 30 GWh of electricity. This is a lot,
but Europe consumes 3,300,000 GWh of electricity every year, soeach Gigafactory would deliver only a few minutes of electricity
storage.
If a combination of renewables can’t help us, can other technologies bail us out? Possibly: Bill Gates speaks of ‘energy miracles’, and he throws money at countless ‘crazy ideas’ that mightdeliver breakthrough technologies in fields from storage, fission,
5

fusion and hydrogen to thermal. You name it, he is involved in it.
And we need all of it. But none of this will be ready this decade,and possible not even next decade. It will not help us with thecrisis that is almost upon us.
In other words, we have a dilemma that needs addressing
by policymakers as a matter of urgency. They have claimed to bedecarbonising economies, while in reality, the consumption ofhydrocarbons around the world is rising, and Europe is not evenclose to eliminating them. Meanwhile, the hydrocarbon industry
needs US$300 billion of re-investment every year just to maintaincurrent production levels. However, convinced by policymakers
that investments in production will become ‘stranded’, it is noteven investing half this amount. The implications for energy
prices will become ever more dramatic. European politicians liketo blame Mr Putin for high energy prices, but that is only partly
true. Constricting production of fossil fuels and replacing reliable
sources of electricity with intermittent ones is also to blame, andwould eventually have brought the continent to the brink of disaster even without the Russian invasion.
In summary, Europe will not deliver on its climate targets.
The energy transition is an order of magnitude more complex
than can be delivered. This must simply be accepted. Those who
put a crash programme of decarbonisation into our laws, basedon false claims about what could be achieved using wind and solar, and by when, have brought us to a dangerous juncture. Were
they bad people? Of course not. But the road to hell is paved withgood intentions.

6About the Global Warming Policy Foundation
People are naturally concerned about the environment, and want to see policies that protect it,
while enhancing human wellbeing; policies that don’t hurt, but help.
The Global Warming Policy Foundation (GWPF) is committed to the search for practical policies. Our aim is to raise standards in learning and understanding through rigorous research andanalysis, to help inform a balanced debate amongst the interested public and decision-makers.
We aim to create an educational platform on which common ground can be established, helping
to overcome polarisation and partisanship. We aim to promote a culture of debate, respect, and ahunger for knowledge.

THE GLOBAL WARMING POLICY FOUNDATION
DirectorHonorary President
Benny Peiser
Lord Lawson
BOARD OF TRUSTEESDr Jerome Booth (Chairman)
Professor Peter Edwards
Kathy Gyngell
Professor Michael Kelly

Terence Mordaunt
Graham Stringer MP
Professor Fritz Vahrenholt

ACADEMIC ADVISORY COUNCIL

Professor Christopher Essex (Chairman)
Professor Wade Allison
Professor J. Ray Bates

Bill Kininmonth
Brian Leyland
Professor Richard Lindzen

Sir Ian Byatt
Dr John Constable
Professor Vincent Courtillot
Professor John Dewey
Professor Peter Dobson
Professor Samuel Furfari
Christian Gerondeau
Professor Larry Gould
Professor William Happer
Professor Ole Humlum
Professor Gautam Kalghatgi
Professor Terence Kealey

Professor Ross McKitrick
Professor Robert Mendelsohn
Professor Garth Paltridge
Professor Ian Plimer
Professor Gwythian Prins
Professor Paul Reiter
Professor Peter Ridd
Dr Matt Ridley
Sir Alan Rudge
Professor Nir Shaviv
Professor Henrik Svensmark
Dr David Whitehouse

GWPF NOTES
1Matt Ridley

A Lukewarmer's Ten Tests

234567891011Susan CrockfordRoss McKitrick
Andrew Montford
Andrew Montford
VariousMichael Kelly
David Whitehouse
Anthony Kelly
Susan Crockford
Andrew Montford

Ten Good Reasons Not to Worry About Polar Bears
An Evidence-based Approach to Pricing CO2 Emissions
Climate – Public Understanding and Policy Implications
Consensus? What Consensus?
The Geological Perspective of Global Warming: A Debate
Technology Introductions in the Context of Decarbonisation
Warming Interruptus: Causes for the Pause
Global Warming and the Poor
Healthy Polar Bears, Less Than Healthy Science
Fraud, Bias and Public Relations

12131415

Harry Wilkinson
Peter Lilley
Constable and Hughes
Patricia Adams

UK Shale Developments
The Helm Review and the Climate-Industrial Complex
Bubble or Babble?
The Road from Paris: China's Climate U-Turn

1617181920212223242526272829303132333435

Mikko PaunioJohn Christy
Gordon Hughes
J. Ray Bates
Andrew Montford
Andrew Montford
David Whitehouse
Gautam Kalghatgi
John Constable
William M Briggs
Ross McKitrick
William M Briggs
J. Ray Bates
Susan Crockford
Michael Kelly
Michael Kelly
Andrew Montford
Peter Ridd
William Kininmonth
Alexander Stahel

Save the Oceans: Stop Recycling Plastic
The Tropical Skies: Falsifying Climate Alarm
Who's the Patsy? Offshore Wind's High-stakes Poker Game
What Caused Hurricane Lorenzo?
Reducing Emissions Without Breaking the Bank
£3 Trillion and Counting: Net Zero and the National Ruin
The Next Solar Cycle and Why it Matters for Climate
The Battery Car Delusion
Who Are They Fooling? The UK Energy White Paper 2020
The Climate Blame Game: Are We Really Causing Extreme Weather?
Suboptimal Fingerprinting
How the IPCC Sees What Isn’t There
Polar Sea Ice and the Climate Catastrophe Narrative
The State of the Polar Bear 2021
Achieving Net Zero: A Report from a Putative Delivery Agency
Net Zero for New Zealand
Ten Things Everyone Should Know About Climate Models
The Good News on Coral Reefs
Rethinking the Greenhouse Effect
The Crisis of the European Energy System

For further information about the Global Warming Policy
Foundation, please visit our website at www.thegwpf.org.
The GWPF is a registered charity, number 1131448.